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Strategic Partnership in Central Bank Digital Currencies Enhances Economic Ties
- China’s People’s Bank and the UAE Central Bank sign a $400 million, five-year memorandum for CBDC cooperation in Hong Kong.
- Agreement facilitates CBDC interchange during bilateral trade, solidifying economic relations and commitment between the two nations.
- With China as the UAE’s largest global trading partner, the deal aims to streamline cross-border transactions and boost financial market liquidity.
China and the United Arab Emirates (UAE) have officially inked a significant Central Bank Digital Currency (CBDC) deal, valued at $400 million. This development, crucial in the realm of CBDCs and global trade, was reported.
The People’s Bank of China, serving as the central bank, played a pivotal role in negotiating this monumental agreement. The China Council For The Promotion of International Trade also played a crucial part in facilitating the deal. Stipulated to last for five years, the memorandum underscores its strategic importance in fostering collaboration between the two nations.
The memorandum encompasses key provisions, notably allowing the exchange of CBDCs during bilateral trade. The signing ceremony took place in Hong Kong, a strategic location underlining the economic ties between China and the UAE. Notably, the UAE Central Bank has affirmed its commitment to fortifying the partnership with China, extending beyond finance to trade and investment.
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Economic Relations Between China and the UAE
China stands as the UAE’s largest global trading partner, cementing a robust economic relationship. In 2022, the non-oil trade volume between the two countries reached an impressive Dh264.2 billion.
This CBDC agreement holds strategic importance in facilitating liquidity to local financial markets. It aims to streamline cross-border financial and trade transactions, ensuring a more effective and efficient process. Government officials assert that this initiative will have a positive impact on the broader economic landscape.
Milestones in China’s Digital Yuan and Global Participation
Since its inception in 2020, China’s digital yuan has achieved remarkable milestones. Transactions have exceeded 1.8 trillion yuan, showcasing substantial user engagement with 120 million wallets. Notably, foreign banks, including Standard Chartered, HSBC, Hang Seng Bank, and Fubon Bank, have recently joined China’s digital yuan pilot tests, reflecting the global interest and participation in China’s digital currency initiatives.
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